It is exciting and rewarding to welcome a new customer into your business. But many businesses overlook one of the easiest sources of new revenue available to them: their current customers. Customer retention is arguably one of the most important strategies for businesses today.
Unfortunately, many businesses will do the hard work of finding new customers and then lose them just as quickly. But research has continually shown that keeping the customers you have is far more important than finding new ones. Researchers from the Gartner Group found that 80 percent of a company’s profits come from 20 percent of their existing customers.
Of course, every business will need new customers. But if you are truly looking to increase profits and grow your business, you must begin focusing on customer retention.
The Benefits of Building Customer Loyalty
Your existing customers are already familiar with your company and know and like your product. They have already purchased from you so assuming their experience was positive, they are far more likely to buy from you again.
According to Marketing Metrics, it is 50 percent easier to sell to an existing customer than it is to a brand new prospect. This is because the know, like, and trust factor has already been established so it is easier to identify and meet their needs.
By focusing on customer retention you will end up spending less on marketing. It is also easier to cross-sell and upsell existing customers.
Plus, existing customers can provide useful feedback on your company’s performance. Their feedback can help you continue to improve your services and products.
5 Steps to Increase Customer Retention
Businesses must take a proactive approach to retaining their current customers. If you aren’t actively working on building customer retention, you are almost certainly leaving money lying on the table.
So now that you understand why it is so important to build customer loyalty, what are some practical steps you can take to actually accomplish this? Let’s look at five steps your business can take to increase customer retention:
Develop a relationship with your customers
Customer retention is inextricably linked to likeability. Customers are more willing to give repeat businesses to brands they trust and feel they have a personal relationship with.
Starbucks does this every time one of their baristas asks for the customer’s name to write on their cup. It may seem like a small gesture (and yes, names do get misspelled) but they are creating an atmosphere where their customers feel known and valued by the company.
And every time a customer walks through the door and the barista remembers their name without being prompted they are almost certainly creating a customer for life.
We have all been a customer at some point and each one of us wants to feel like the company we made a purchase from values our business. Look for opportunities to develop personal relationships with your customers and watch your brand gain loyalty like never before.
Proactively manage problems
Customers will almost always remember negative encounters with a business. So the best time to address a problem with a customer is before it occurs.
Even if you meet a customer’s expectations nine times out of ten, it is the tenth time they are going to remember. And one negative experience could result in them ending their relationship with your company.
A good way to do this is by managing your customer’s expectations right from the start. You always want to promise less and deliver more when it comes to your customers.
So for instance, even if you can respond to customer requests within eight hours or less, promise a 24-hour response time. Your customers will be pleasantly surprised that you got back to them so quickly. And in the rare event that it does take longer than eight hours, you still met their expectations.
Be accessible to your customers
Don’t play hard to get with your customers. If your customers have a hard time getting in contact with you, this will almost certainly lead to frustration and missed opportunities for sales.
Give your customers a way to get in touch with you 24 hours a day. Make sure the contact information on your website is up to date. And provide a variety of ways for your customers to get in touch with you, such as by phone, through email, or through your website.
However, you shouldn’t just wait for your customers to reach out to you. Find a way to maintain constant contact with your customers through social media, your content marketing efforts, and sending them emails or text messages about special offers.
Go the extra mile for your customers
Companies often forget how important it is to go above and beyond what their customers expect. There are countless ways for you to do more for your customers and exceed their expectations.
Send them a 20 percent off coupon after the purchase of a larger item. Send them an email on their birthday. Host contests that reward the winning participants with a free product or service. Set up a loyalty program for your top customers.
The route you choose doesn’t really matter you just need to make sure you deliver the unexpected.
Send customer feedback surveys
It’s hard to build relationships with your customers or go above and beyond their expectations if you don’t really know what they want. Customer feedback surveys are an invaluable way to begin better serving your customers. It is also a great way to show your customers that you value their input.
Did you know that signing up a new customer will cost your company five times as much as keeping the customers you already have? Businesses that actively work on engaging their current customers and building customer loyalty will be rewarded with higher profits while spending less on marketing.
The five strategies outlined above will help you build better relationships with your current customers and boost your bottom line. Your current customers will spend more, stick around longer, and even tell their friends and family about you. And what more could really ask for than that?